Canal+ owner buys Mediaset Premium to expand pay-TV reach

French media conglomerate Vivendi has acquired Italian pay-TV broadcaster Mediaset Premium for around €750m (US$856m) from its Milanese owner Mediaset in an all-stock transaction. The deal represents more consolidation of pay-TV on the continent following British group Sky taking over Sky Deutschland and Sky Italia in 2014.

French media conglomerate Vivendi (EPA:VIV) has acquired Italian pay-TV broadcaster Mediaset Premium for around €750m (US$856m) from its Milanese owner Mediaset (BIT:MS) in an all-stock transaction.

Vivendi already owns leading Paris-based DTH provider Canal+ and said the Mediaset Premium acquisition would take its pay-TV subscriber base to more than 13 million.

The deal represents more consolidation of pay-TV on the continent following British group Sky taking over Sky Deutschland and Sky Italia in 2014.

The change of ownership at Mediaset Premium is part of a wider tie-up between the two groups.

Mediaset transferred shares equivalent to 3.5% of its €4.05bn (US$4.62bn) capital to Vivendi. In turn, Vivendi gave Mediaset shares equal to 0.54% of its €25.3bn (US$28.9bn) share capital. The shares equate to similar amounts around the €140m (US$160m) mark.

Vivendi also committed shares worth 2.96% of its share capital specifically to acquire 100% of Mediaset Premium – valuing it at roughly €750m (US$856m) – meaning Mediaset will own 3.5% of Vivendi. Mediaset only owned 89.9% of Mediaset Premium, through subsidiary RTI, and the remaining 11.1% is owned by Spanish telecoms group Telefónica. Under a shareholder agreement Mediaset is able to sell 100% of the pay-TV provider and reimburse Telefónica.

The takeover is subject to regulatory approval and the companies hope to close the transaction by 30 September.

The two groups have signed a mutual three-year lock-up agreement to keep hold of the shares.

Vivendi has also agreed on a stability pact with Fininvest, Mediaset’s controlling shareholder owned by the family of former Prime Minister of Italy Silvio Berlusconi. Under the terms of that agreement, Vivendi will not buy shares in Mediaset in the first year after the closing date.

In the second and third years after the closing date, Vivendi will not be permitted to purchase shares in Mediaset that would lead to the ownership of a stake totaling more than 5% of Mediaset’s share capital. Fininvest is not subject to the same restrictions and can buy Mediaset shares in line with applicable regulations on mandatory takeover bids.

Mediaset Premium currently transmits its services over a digital terrestrial network, but plans have been afoot for some time for the company to transition to satellite. A Mediaset spokesperson said that there was no “concrete” plan to move over to DTH just yet.

Vivendi declined to comment on whether it would push Mediaset Premium onto satellite or integrate it with Canal+. In addition to France, Canal+ also operates in most of Africa, Poland and Vietnam, and smaller markets in the Caribbean and Central America, the South Pacific and the Indian Ocean.

Thinking global

International audiences are the focus of the strategic arrangement between Mediaset and Vivendi. The two will collaborate on creating content suitable for both their home markets and for international audiences.

They also plan to develop a global over-the-top television streaming platform in the face of increasing competition from the likes of Netflix and Amazon Prime. Both Vivendi – which owns Studio Canal – and Mediaset both already produce television and film content. The companies aim to expand into new markets through the streaming platform.

Mediaset said it had “a fully shared vision” with Vivendi of how to capture new opportunities “across the international competitive landscape”, characterized by “increasingly global video contents, the emergence of international OTT players and the increasingly transnational structure of pay TV players”.

Last week Canal+ continued its expansion in the Americas by snapping up US-based content distributor Alterna’TV, which provides Spanish-speaking channels and reaches more than 10 million subscribers across North, Central and South America.

The CEO of Canal+’s international division Canal+ Overseas, Jacques du Puy, told SatelliteFinance that it was looking to expand further in the Americas and was open to inorganic growth options to achieve that.

Consolidation catalyst

International expansion is a key tenet of Vivendi chairman Vincent Bolloré’s (pictured) strategy for the group. Bolloré has also led Vivendi’s investment in Italy’s incumbent telecoms operator Telecom Italia, in which it now holds close to 25%. The Mediaset tie-up has got analysts pondering what could come next for the Italian media and telecoms sectors. In the past, Vivendi has been rumored to have made an informal approach for Sky.

Paolo Pescatore, an analyst at CCS Insight, said in a memo that the deal heralded a “new era in content acquisition, commissioning and distribution in Southern Europe, with the opportunity to expand into other European markets.”

He argued the tie-up had been triggered by Sky’s move to consolidate its position in Europe, and noted that consolidation in pay-TV was also driven by the significant competitive pressure they have come under, both from OTT providers and telcos adding TV and video services as part of multiplay offers.

“This move will no doubt spark more consolidation not only in media but among telcos as the European market driven by convergence moves towards a handful of key players who own assets in connectivity and content,” Pescatore concluded.